AMD's Lisa Su sees 35% annual sales growth driven by 'insatiable' AI demand

AMD's shares experienced a significant movement following CEO Lisa Su's announcement that the company expects its revenue to grow approximately 35% annually over the next three to five years. This growth is largely attributed to the relentless demand for artificial intelligence (AI) chips. Su highlighted that a substantial portion of this growth will originate from AMD's AI data center segment, which is projected to expand at an impressive rate of 80% per year during the same timeframe, potentially reaching sales in the tens of billions by 2027. "We are optimistic about our capabilities based on both our current customer engagements and those in development," Su conveyed to analysts. Looking ahead, Su indicated that AMD aims to capture a double-digit market share in the data center AI chip sector within the next few years. Currently, Nvidia commands the market with over 90% share, boasting a market capitalization exceeding $4.6 trillion, while AMD stands at roughly $387 billion. As part of its strategic initiatives, AMD is hosting its first financial analyst day since 2022, as the company finds itself at the forefront of a surge in AI-related data center investments. Companies are investing heavily in graphics processing units (GPUs) to support AI applications, including those like OpenAI's ChatGPT, while also seeking alternatives to manage costs effectively. AMD remains one of the few major GPU developers alongside Nvidia. In October, AMD forged a significant partnership with OpenAI, agreeing to supply billions of dollars worth of Instinct AI chips over several years, beginning in 2026 with a commitment to deliver enough chips to power a gigawatt of operations. This deal may allow OpenAI to acquire a 10% stake in AMD. Su also pointed out ongoing long-term agreements with Oracle and Meta. In 2025, AMD's shares have nearly doubled as it collaborates with OpenAI to develop next-generation systems utilizing its forthcoming Instinct MI400X AI chips, expected to ship next year. These chips are designed to work in a "rack-scale" configuration, allowing 72 of them to function collectively, a critical capability for managing extensive AI models. If successful, AMD could narrow the gap with Nvidia, which has offered rack-scale systems for three product generations. Su projected that the total market for AI data center components and systems could reach $1 trillion annually by 2030, reflecting a remarkable 40% yearly growth. In its fiscal 2024, AMD reported $5 billion in AI chip sales, a significant increase from its previous estimate of a $500 billion market for AI chips by 2028. This updated figure includes central processors (CPUs), which are vital components of computers but are not exclusively AI accelerators like AMD's and Nvidia's GPUs. AMD's Epyc CPUs remain a core product for the company. In the CPU market, AMD competes primarily with Intel and various smaller Arm-based processors. While AMD emphasized its AI business growth, Su reassured shareholders that the company's other divisions are also performing strongly. "We want to emphasize that all areas of our business are thriving, which is a very favorable position to be in," Su concluded.